What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2025-03-28 compared with 2024-03-27 · 119 added, 99 removed, 13 unchanged (94% of the section changed)

1 unchanged sentence

following discussion and analysis of our financial condition and results of operations should be read together with, and is qualified

in its entirety by reference to, our audited financial statements and related notes included elsewhere in this Annual Report, which have

been prepared in accordance with generally accepted accounting principles in the United States (“U.S.

The following

discussion may contain forward-looking statements based on assumptions we believe to be reasonable.

Our actual results could differ materially

from those discussed in these forward-looking statements.

business and operations of the Trust are described above under Part I, Item I under the heading “Business”, which is incorporated

into this Item by reference.

in its entirety by reference to, our audited financial statements and related notes included elsewhere in this Annual Report,

which have been prepared in accordance with generally accepted accounting principles in the United States (“U.S.

The following discussion may contain forward-looking statements based on assumptions we believe to be reasonable.

Our actual results

could differ materially from those discussed in these forward-looking statements.

business and operations of the Trust are described above under Part I, Item I under the heading “Business”, which

is incorporated into this Item by reference.

Objectives and Principal Investment Strategies

investment objective of the Trust is for the Shares to reflect the performance of the value of a bitcoin as represented by the

CME CF Bitcoin Reference Rate – New York Variant (the “Index”), less the Trust’s liabilities and expenses.

Investment Strategies

seeking to achieve its investment objective, the Trust holds bitcoin and values its Shares daily based on the value of bitcoin

as reflected by the Index, which is an independently calculated value based on an aggregation of executed trade flow of major

bitcoin spot exchanges.

The Sponsor is authorized under the Trust Agreement to substitute an alternative index, reference rate,

or other methodology for valuing bitcoin for the Index for purposes of the Trust’s investment objective and valuation policies

at its sole discretion and without Shareholder approval.

The Shares are designed to provide investors with a cost-effective and

convenient way to invest in bitcoin.

Use of the CME CF Bitcoin Reference Rate – New York Variant

each day other than a Saturday or a Sunday, or a day on which Nasdaq is closed for regular trading (a “Business Day”),

as soon as practicable after 4:00 p.m.

ET, the Trust evaluates the bitcoin held by the Trust as reflected by the CME CF Bitcoin

Reference Rate – New York Variant for the Bitcoin – U.S.

Dollar trading pair (the “CF Benchmarks Index”)

and determines the net asset value of the Trust and the net asset value per Share (“NAV”).

Benchmarks Index is calculated as of 4:00 p.m.

The CF Benchmarks Index is designed based on the IOSCO Principles for Financial

Benchmarks and is a Registered Benchmark under UK Benchmark Regulations (“BMR”).

The administrator of the CF Benchmarks

Index is CF Benchmarks Ltd.

(the “Index Administrator”) a UK incorporated company, authorized and regulated by the

Financial Conduct Authority (“FCA”) of the UK as a Benchmark Administrator, under UK BMR.

of Operations for the Year Ended December 31, 2024

the year ended December 31, 2023, the Trust had not commenced operations other than matters relating to its organization and the registration

of the Shares under the 1933 Act.

During this period, the Trust did not issue any Shares and no Shares were outstanding.

the Trust did not purchase any bitcoin or other assets during the year ended December 31, 2023, nor were there disbursements of cash

from the Trust during this reporting period.

Furthermore, the Trust did not receive any revenue or capital gains (losses), or incur any

expenses during this reporting period.

The Trust commenced investment operations on January 11, 2024.

incurred during the year ended December 31, 2023 in connection with the organization of the Trust and the initial offering costs of the

Shares were borne by the Sponsor and will not be subject to reimbursement by the Trust.

Trust’s net asset value increased from $0 at December 31, 2023, to $826,115,990 at December 31, 2024.

The change in the

Trust’s net assets resulted from an increase in outstanding Shares, which grew from 0 at December 31, 2023, to 31,260,000

at December 31, 2024, as a result of 36,635,000 Shares (7,327 Baskets) being created and 5,373,000 Shares (1,075 Baskets) being

redeemed during the year, and an increase in the value of bitcoin, which appreciated 103.7% from $45,853 at January

10, 2024 (the initial share purchase date) to $93,381 at December 31, 2024.

net asset value per Share increased 103.3% from $13.00 at January 10, 2024 (the initial

share purchase date) to $26.43 at December 31, 2024.

net asset value per Share of $30.15 at December 17, 2024 was the highest during the quarter, compared with a low of $11.12 at

January 23, 2024.

increase in net assets from operations for the year ended December 31, 2024 was $306,959,179, resulting from an increase in unrealized

gain on the Trust’s bitcoin investment of $262,849,955, realized gains on the disposition of bitcoin of $45,222,195, and

Sponsor Fees incurred of $1,112,971.

Resources and Liquidity

Trust does not hold a cash balance except in connection with the creation and redemption of Baskets or to pay expenses not assumed by

To the extent the Trust does not have available cash to facilitate redemptions or pay expenses not assumed by the Sponsor,

the Trust will sell bitcoin.

When selling bitcoin on behalf of the Trust, the Sponsor endeavors to minimize the Trust’s holdings

of assets other than bitcoin.

As a consequence, the Sponsor expects that the Trust will have an immaterial amount of cash flow from its

operations and that its cash balance will be insignificant at the end of each reporting period.

The Trust’s only sources of cash

are proceeds from the sale of Baskets and bitcoin.

The Trust will not borrow to meet liquidity needs.

exchange for the Sponsor’s Fee, the Sponsor has agreed to assume most of the expenses incurred by the Trust.

The Sponsor contractually

waived the Sponsor’s Fee until April 10, 2024, and will of accrue at an annual rate of 0.25% of the Trust’s Bitcoin Holdings

beginning thereafter.

As a result, the only ordinary expense of the Trust is expected to be the Sponsor Fee.

The Trust is not aware of

any trends, demands, conditions or events that are reasonably likely to result in material changes to its liquidity needs.

Item I under the heading “Business –Expenses” for an additional discussion of the Trust’s fees and expenses.

Trust does not hold a cash balance except in connection with the creation and redemption of Baskets or to pay expenses not assumed

by the Sponsor.

To the extent the Trust does not have available cash to facilitate redemptions or pay expenses not assumed by

the Sponsor, the Trust will sell bitcoin.

When selling bitcoin on behalf of the Trust, the Sponsor endeavors to minimize the Trust’s

holdings of assets other than bitcoin.

As a consequence, the Sponsor expects that the Trust will have an immaterial amount of

cash flow from its operations and that its cash balance will be insignificant at the end of each reporting period.

only sources of cash are proceeds from the sale of Baskets and bitcoin.

exchange for the Sponsor Fee, the Sponsor has agreed to assume most of the expenses incurred by the Trust.

The Sponsor Fee accrues

at an annual rate of 0.25% of the Trust’s Bitcoin Holdings.

As a result, the only ordinary expense of the Trust is the Sponsor

The Trust is not aware of any trends, demands, conditions or events that are reasonably likely to result in material changes

to its liquidity needs.

Balance Sheet Arrangements and Contractual Obligations

Trust has not used, nor does it expect to use in the future, special purpose entities to facilitate off balance sheet financing arrangements

and have no loan guarantee arrangements or off balance sheet arrangements of any kind other than agreements entered into in the normal

course of business, which may include indemnification provisions related to certain risks service providers undertake in performing services

for the Trust.

While the Trust’s exposure under such indemnification provisions cannot be estimated, these general business indemnifications

are not expected to have a material impact on a Trust’s financial position.

Trust has not used, nor does it expect to use in the future, special purpose entities to facilitate off balance sheet financing

arrangements and have no loan guarantee arrangements or off balance sheet arrangements of any kind other than agreements entered

into in the normal course of business, which may include indemnification provisions related to certain risks service providers

undertake in performing services for the Trust.

While the Trust’s exposure under such indemnification provisions cannot

be estimated, these general business indemnifications are not expected to have a material impact on a Trust’s financial

Fee payments made to the Sponsor are calculated as a fixed percentage of the Trust’s Bitcoin Holdings.

As such, the Sponsor cannot

anticipate the payment amounts that will be required under these arrangements for future periods as the Trust’s net assets are

not known until a future date.

As such, the Sponsor

cannot anticipate the payment amounts that will be required under these arrangements for future periods as the Trust’s net

assets are not known until a future date.

Accounting Policies

Market and Fair Value Determination

Trust’s periodic financial statements may not utilize the net asset value of the Trust determined by reference to the Index to

the extent the methodology used to calculate the Index is deemed not to be consistent with GAAP.

The Trust’s periodic financial

statements will be prepared in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification

Topic 820, “Fair Value Measurements and Disclosures” (“ASC Topic 820”) and utilize an exchange-traded price from

the Trust’s principal market for bitcoin on the Trust’s financial statement measurement date.

The Sponsor will determine

at its sole discretion the valuation sources and policies used to prepare the Trust’s financial statements in accordance with GAAP.

The Trust intends to engage a third-party vendor to obtain a price from a principal market for bitcoin, which will be determined and

designated by such third-party vendor daily based on its consideration of several exchange characteristics, including oversight, and

the volume and frequency of trades.

Under GAAP, such a price is expected to be deemed a Level 1 input in accordance with the ASC Topic

820 because it is expected to be a quoted price in active markets for identical assets or liabilities.

Trust’s periodic financial statements may not utilize the net asset value of the Trust determined by reference to the Index

to the extent the methodology used to calculate the Index is deemed not to be consistent with GAAP.

The Trust’s periodic

financial statements will be prepared in accordance with the Financial Accounting Standards Board (“FASB”) Accounting

Standards Codification Topic 820, “Fair Value Measurements and Disclosures” (“ASC Topic 820”) and utilize

an exchange-traded price from the Trust’s principal market for bitcoin on the Trust’s financial statement measurement

Under US GAAP, such a price is expected to be deemed a Level 1 input in accordance with the ASC Topic 820 because it is

expected to be a quoted price in active markets for identical assets or liabilities.

The Sponsor will determine at its sole discretion

the valuation sources and policies used to prepare the Trust’s financial statements in accordance with US GAAP.

determine which market is the Trust’s principal market (or in the absence of a principal market, the most advantageous market)

for purposes of calculating the Trust’s financial statements, the Trust follows ASC 820-10, which outlines the application of fair

value accounting.

ASC 820-10 determines fair value to be the price that would be received for bitcoin in a current sale, which assumes

an orderly transaction between market participants on the measurement date.

ASC 820-10 requires the Trust to assume that bitcoin is sold

in its principal market to market participants or, in the absence of a principal market, the most advantageous market.

Market participants

are defined as buyers and sellers in the principal or most advantageous market that are independent, knowledgeable, and willing and able

The Trust may transact through digital asset brokers or dealers, in multiple markets, and its application of ASC 820-10

reflects this fact.

The Trust anticipates that, while multiple venues and types of markets will be available to the digital asset brokers

or dealers from whom the Sponsor acquires or disposes of the Trust’s bitcoin, the principal market in each scenario is determined

by looking at the market-based level of volume and bitcoin trading activity.

Digital asset brokers or dealers may transact in a Brokered

Market, a Dealer Market, Principal-to-Principal Markets and Exchange Markets (each as defined in the FASB ASC Master Glossary).

on information reasonably available to the Trust, Exchange Markets have the greatest volume and level of activity for the asset.

Trust therefore looks to accessible Exchange Markets as opposed to the Brokered Market, Dealer Market and Principal-to-Principal Markets

to determine its principal market.

As a result of the aforementioned analysis, an Exchange Market has been selected as the Trust’s

principal market.

The Trust determines its principal market (or in the absence of a principal market the most advantageous market) on

a quarterly basis to determine which market is its Principal Market for the purpose of calculating fair value for the creation of quarterly

and annual financial statements.

process that the Sponsor has developed for identifying a principal market, as prescribed in ASC 820-10, which outlines the application

for purposes of calculating the Trust’s financial statements, the Trust follows ASC 820-10, which outlines the application

of fair value accounting.

The process begins by identifying publicly available, well-established and reputable bitcoin trading venues

(Exchange Markets, as defined in the FASB ASC Master Glossary), which are selected by the Sponsor and its affiliates at their sole discretion.

Those markets include Binance, Bitstamp, Coinbase, itBit, Kraken, Gemini, and LMAX.

The Sponsor then, through a service provider,

calculates on each valuation period, the highest volume venue during the 60-minute period prior to 4:00 ET for bitcoin.

The Sponsor then

identifies that market as the principal market for bitcoin during that period, and uses the price for bitcoin from that venue at 4:00

ET as the principal market price.

ASC 820-10 determines fair value to be the price that would be received for bitcoin in a current sale,

which assumes an orderly transaction between market participants on the measurement date.

ASC 820-10 requires the Trust to assume

that bitcoin is sold in its principal market to market participants or, in the absence of a principal market, the most advantageous

Market participants are defined as buyers and sellers in the principal or most advantageous market that are independent,

knowledgeable, and willing and able to transact.

The Trust may transact through digital asset brokers or dealers, in multiple

markets, and its application of ASC 820-10 reflects this fact.

The Trust anticipates that, while multiple venues and types of

markets will be available to the digital asset brokers or dealers from whom the Sponsor acquires or disposes of the Trust’s

bitcoin, the principal market in each scenario is determined by looking at the market-based level of volume and bitcoin trading

Digital asset brokers or dealers may transact in a Brokered Market, a Dealer Market, Principal-to-Principal Markets

and Exchange Markets (each as defined in the FASB ASC Master Glossary).

Based on information reasonably available to the Trust,

Exchange Markets have the greatest volume and level of activity for the asset.

The Trust therefore looks to accessible Exchange

Markets as opposed to the Brokered Market, Dealer Market and Principal-to-Principal Markets to determine its principal market.

As a result of the aforementioned analysis, an Exchange Market has been selected as the Trust’s principal market.

determines its principal market (or in the absence of a principal market the most advantageous market) on a quarterly basis to

determine which market is its Principal Market for the purpose of calculating fair value for the creation of quarterly and annual

financial statements.

Sponsor has developed a process for identifying a principal market, as prescribed in ASC 820-10, which outlines the application

of fair value accounting.

The process begins by identifying publicly available, well-established and reputable bitcoin trading

venues (Exchange Markets, as defined in the FASB ASC Master Glossary), which are selected by the Sponsor and its affiliates at

their sole discretion.

The Sponsor then identifies the principal market for bitcoin during that period and uses the price for

bitcoin from that venue at 4:00 ET as the principal market price.

Company Considerations

Trust is an investment company for GAAP purposes and follows accounting and reporting guidance in accordance with the FASB ASC Topic

946, Financial Services – Investment Companies.

The Trust uses fair value as its method of accounting for Bitcoin in accordance

with its classification as an investment company for accounting purposes.

The Trust is not a registered investment company under the

Investment Company Act of 1940.

GAAP requires management to make estimates and assumptions that affect the reported amounts in the financial

statements and accompanying notes.

Actual results could differ from those estimates and these differences could be material.

Trust is an investment company for US GAAP purposes and follows accounting and reporting guidance in accordance with the FASB

ASC Topic 946, Financial Services – Investment Companies.

The Trust uses fair value as its method of accounting for bitcoin

in accordance with its classification as an investment company for accounting purposes.

The Trust is not a registered investment

company under the Investment Company Act of 1940.

US GAAP requires management to make estimates and assumptions that affect the

reported amounts in the financial statements and accompanying notes.

Actual results could differ from those estimates and these

differences could be material.

Quantitative and Qualitative Disclosures About Market Risk.

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis